If you are overwhelmed by debt, you might consider filing a Chapter13 bankruptcy. But it is crucial to make the right decision. Is Chapter 13 bankruptcy right for you? Will it solve your financial problems? This article answers some of the most common questions people have about this potential solution.
#1. Will I lose my house?
Your home is probably your most valuable investment. But losing your home is also a highly charged emotional experience. You probably want to keep your home even when facing unmanageable debt.
In many cases, people are able to stop foreclosures after filing for a Chapter 13 bankruptcy. Typically, you need to be able to continue making payments through your repayment plan. But the bankruptcy filing puts an automatic stay on collection efforts, which gives you time to work out other arrangements.
As soon as you realize you are having trouble making mortgage payments, talk to your lender. If you can’t work out a solution, call a bankruptcy attorney.
#2. Will I ever be able to rebuild my credit after a Chapter 13 bankruptcy?
Yes, it is possible to build your credit score back up to your pre-bankruptcy levels. However, it does take some work on your party.
Check your credit reports to make sure that all information is correct. Then slowly add credit back into your life. For example, you could get a secured credit card. Use it but pay it off monthly. Also, paying your bills on time goes a long way toward rebuilding your credit after a Chapter 13 bankruptcy.
#3. Can I discharge medical bills through Chapter 13 bankruptcy?
In most cases, your medical bills can be included in your repayment plan. Your medical creditors will receive some payment through your plan. After you complete your plan, which usually takes three to five years, the bankruptcy court will discharge most of your remaining debts.
Some bills cannot be discharged in a Chapter 13 bankruptcy. Generally, medical bills are dischargeable.
#4. What is a repayment plan in a Chapter 13 bankruptcy?
Unlike a Chapter 7 bankruptcy, your debts are not all discharged in a Chapter 13. Instead, you and your attorney will work with the bankruptcy trustee to develop your repayment plan.
The purpose of the plan is to repay all or at least part of your debts. You must have enough income to keep your payments current.
#5. Will I have to face my creditors?
Probably. You and your attorney will attend a meeting of creditors. Here, the bankruptcy trustee might allow creditors to ask you questions about your debt. It might be uncomfortable at times. However, this step usually must be taken before you prepare a repayment plan and eventually discharge some of your debt.
#6. What does a Chapter 13 bankruptcy trustee do?
The bankruptcy trustee evaluates a debtor’s case. Then, the trustee works with creditors and Chapter 13 bankruptcy filers to work out a repayment plan. After the plan is set, the trustee typically accepts payments from debtors and distributes payments to creditors.
#7. What happens to my student loans after Chapter 13?
Debts are classified as priority, secured, and unsecured. Secured claims might be for a car loan because the creditor could take the car back if the loan isn’t paid. Unsecured debts are the lowest priority debt.
Student loans are classed as unsecured. This means you might not have to pay all your student loan debt, and some will be discharged.
However – and this is important – you need to talk to an attorney about this as soon as possible. Your disposable income figures into how much debt is repaid. The calculations are complex and easy to misunderstand. And it is notoriously difficult to discharge student loan debt unless you can demonstrate a serious hardship.
Call to Find Out if Chapter 13 Bankruptcy Is Right for You
Attorney Leslie Craft has the experience you need to deal with bankruptcy and traffic violations. Ms. Craft’s goal is always to help her clients get past their legal problems and get on with their lives.
Bankruptcy doesn’t have to be a painful process. To schedule a free personal consultation, call Craft Law Offices at (252) 752-0297 or email us at email@example.com. My offices are located in Greenville, Morehead City, and Rocky Mount for your convenience. I also represent clients in surrounding Eastern North Carolina communities, including Warrenton, Elizabeth City, Roanoke Rapids, Goldsboro, and Jacksonville.